–
OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 24/03/21 (as at 8am AEDT)
- SPI200 (Jun) overnight futures down 2 pts to 6715
- SP500 down 30.07 pts to 3910.52
- NASDAQ Composite down 149.84 pts to 13227.70
- Dow Jones down 308.05 pts to 32,423.15
- FTSE100 down 26.91 pts to 6699.19
- DAX30 up 4.81 pts to 14662.02
- GOLD futures US session (April) down $12.40 to $1725.70 an ounce
- COPPER futures US session (Comex May) down $0.1117 to $4.0278 a pound
- OIL futures US Session (Nymex April) down $4.21 to $57.35 a barrel
- CRB Index down 4.56 pts to 184.50
- AUDUSD trading at 0.7623
- EURUSD trading at 1.1849
- GBPUSD trading at 1.3753
- USDJPY trading at 108.6000
- USD Index US Session (ICE Mar) up 0.609 to 92.350
–
US indexes took a turn for the worse and slid late in the session to end in the red. Traders reacted to comments from Powell and Yellen about potentially raising corporate taxes to pay for new public investments. They remain concerned for the labour market hole from the pandemic and getting the economy back to full employment. The added concern for traders from raising taxes only adds to concerns for inflation and rising bond yields. Generally over priced companies will find it harder to produce returns if the cost of debt goes up and taxes are hiked although stocks remain the only game in town for now for yield hungry investors. There is a belief that Powell will be wrong and inflation will get out of hand and hang around with a massive amount of stimulus dollars flowing into the market and also on the sidelines waiting to come in from savings. It is a game of wait and see the bond markets reaction and whether the stock market is spooking into taking some risk off the table. The DOW closed down 0.94% while the broader SP500 ended down 0.76% and the Nasdaq closed down 1.12% for the session. In Europe, major Indexes edge lower as a fresh lockdown in Germany and a new wave of infections saw buyers take the foot of the peddle and risk off the table. German citizens were asked to stay at home for five days over Easter holidays as a lockdown was extended until April 18. Traders did not react too negatively although are concerned that a recovery will take longer than expected and continue to take a toll on some businesses.
The USD Index rallied in a move that started well ahead of the Feds testimony to Congress. Prices started to move higher in the European session and pushed back up to the previous highs around 92.400. The move looked more like a squeeze on shorts as the bond market rallied and yields fell. Either way, price could easily extend on the move and push to the 94.000 area which would further pressure dollar linked commodities. In the short term, we are watching for a reaction of sellers off the 92.400 area for a pullback ans squeeze on some late buyers. The EURUSD moved lower as the dollar added to the recent gains and tested resistance. The Euro pushed down into previous lows from 9th March so we may expect to see a reaction from buyers at the zone if the dollar reacts lower off resistance. If the Dollar continues to push higher then the Euro could see a bigger move down longer term to the 1.1600 area as new virus concerns weigh on the currency. The GBPUSD was knocked down through support around 1.3790 as the dollar found strength. Price also held a retest of the zone from below which suggests that there is more downside to come in the near term. Expect that Asian market pound traders will play catchup and push price lower as long as the 1.3800 lower highs holds. The AUDUSD came under fire as the 0.7700 level broke under the weight of the selling pressure. Price extended the move down into lows also from 9th March. We will be watching for a reaction higher today from buyers to see if they can defend the level and squeeze out some sellers. The USDJPY moved lower even as the USD rallied which suggests some safe haven buying into the YEN. Price remains in a range from 108.350 to 109.250 and may look to clear out some stops below the 108.350 area in the near term as long as the 108.750 area holds as a lower high. If not then we expect to see a rally back to the top end of the range.
SPOT GOLD is again showing some cracks and has broken down out of the recent contraction to potentially continue the longer term trend down. If sellers again stand firm, expect prices to test back down below the 1700 level. Sellers will be watching to see if a lower high is confirmed at 1730 as the pressure is expected to build and buyers squeezed back out of the action. Crude Oil took a hit as the 60.00 level could not hold up to the selling pressure as concerns for a slowing recovery were confirmed as Germany extended a lockdown. Price has now broken a key uptrend and may look to squeeze out more buyers as the pressure lower builds. There is minor support around current levels that may provide enough buying for a small squeeze higher although expect that there will be more buyers looking to sell into pops in the short term. Copper fell away from the 4.1565 area as expected with buyers quick to lock in some gains from the spike higher the previous session. Price has now broken the uptrend on demand concerns so we will be watching to see if there will be a near term unwind of longer term buyers into the market.
Cryptocurrencies bounced back from some early weakness in the Asian session to grind out some gains into the US close. The short term pressure remains down and prices will need to hold key support levels. Bitcoin is currently trading at $54,354.1 down 0.35% while Ethereum is at $1665.96 down 0.79% and Ripple is at $0.54030 down 0.42%.
The ASX200 started the day on the front foot to add to the gains from the previous session only to see a weak Asian market drag the index back down into the close. The ASX200 ended the day down 7.1 points to 6745.4 with the Energy and IT sectors being the biggest drags while Telecoms and Utilities were the biggest positive movers. All in all it was a contained session with falling stocks outnumbering advancing ones by 727 to 579 and 387 ended unchanged. Travel related stocks may take a hit today as the sector fell as much as 4% overnight. Gold in Aussie dollar terms rallied which may see support for Gold stocks although Spot Gold remains under pressure.
The ASX200 is expected to open flat as the SPI200 mirrored the day sessions action and ended back where it started overnight.
–
ECONOMIC DATA OUT TODAY (AEDT)
AUD Goods Trade Balance 11:30am
GBP CPI and PPI Data 6pm
EUR French Flash Manufacturing and Services PMI 7:15am
EUR German Flash Manufacturing and Services PMI 7:30pm
EUR Flash Manufacturing and Services PMI 8pm
GBP Flash Manufacturing and Services PMI 8:30pm
USD Durable Goods Orders Data 11:30pm
USD Fed Chair Powell Testifies 1am
USD Crude Oil Inventories 1:30am
EUR ECB President Lagarde Speaks 2:40am
–
SPI200 INTRADAY LEVELS TO WATCH
